PNB Gilts expects 30-35% growth this year

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PNB Gilts expects 30-35% growth this year

In an interview with CNBC-TV18, DVSSV Prasad, MD, PNB Gilts says, the yields have gone up from 7.85% in March 2010 to 7.98% in March 2011, whereas the cost of borrowing has gone up from 3.25% to 6.75%. He expects 30-35% growth this year.

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In an interview with CNBC-TV18, DVSSV Prasad, MD, PNB Gilts says, the yields have gone up from 7.85% in March 2010 to 7.98% in March 2011, whereas the cost of borrowing has gone up from 3.25% to 6.75%. He expects margins will be under squeeze going forward.

He expects 30-35% growth this year.

Below is the verbatim transcript of his interview with Reema Tendulkar and Ekta Batra of CNBC-TV18. Also watch the accompanying video.

Q: FY11 wasn't such a great year for you; your sales were down about 5%, your net profits declined by about 20%. What is the outlook for the next year? Any kind of guidance that you could help us with?

A: The yields have gone up from 7.85% in March 2010 to 7.98% in March 2011, the increase in the yield is only 13 bps, whereas the cost of borrowing has gone up from 3.25% to 6.75%, that is 110%. So, six-and-a-half times the costs have gone up. The yields have gone up only by 2%. So, in spite of that we have churned up a profit of Rs 44 crore vis-à-vis Rs 56 crore, although it may look down from the previous years. It is because of 110% increase in the cost of borrowing.

Trading volumes have gone up by 40%, Rs 48,000 crore our trading volumes to Rs 68,000 crore. Looking forward, we expect 30-35% growth this year because we want to increase our trading volumes further as well as diversify our activities as well and expand into the present activities also.

Q: Can you give us an update on margins then?

A: Yes, margins will be under squeeze. We want to compensate that by increasing our volumes as well as diversifying our activities. Presently, the cost of borrowing is 6.75% and it is likely to go up maybe by 100 bps maximum by March 2012. The yields are likely to go up maybe up to 8.5% by March 2012. But we would like to compensate it by increased volumes as well as diversified activities.